State says independent contractors are people who are in business for themselves

The U.S. Department of Labor considers misclassification of employees as independent contractors a serious problem for affected employees, employers and the entire economy.

The department maintains a website on the issue, listing states where federal and state authorities are cooperating on initiatives to address the problem through memorandums of understanding.

In New England, such agreements exist with Connecticut and Massachusetts. That doesn't mean the federal government is not cooperating with New Hampshire on the issue, according to Daniel Cronin, assistant district director of the Labor Department's Wage and Hour Division for Northern New England.

He said misclassified employees are often denied access to critical benefits and protections - such as family and medical leave, overtime, minimum wage and unemployment insurance. Employee misclassification also generates substantial losses to the Social Security and Medicare funds, as well as to state unemployment insurance and workers compensation funds.

The problem is widespread and most prevalent in agriculture, food service, hospitality, landscaping, construction, health care, child care services, retail and security sectors, according to Cronin, who said investigations are underway in each of those areas across the country.

But it's certainly not limited to those industries. Cronin said the Labor Department is investigating the misclassification of New Hampshire employees in the business of automobile detailing.

"Essentially, what we are finding is a variety of business relationships where the automobile dealer is contracting with a large automobile detailing service provider, some of whom have employees and some of whom have what they call independent contractors," he said.

According to the state Department of Labor, genuine independent contractors are in business for themselves and are not employees. While the tasks are determined by the employer, the manner in which they are completed and the control as to how the work is done is determined by the independent contractor. In order to qualify as an independent contractor in New Hampshire, someone has to meet all 12 criteria established under state law.

The complete list is available on the state website at www.nh.gov/nhworkers.